Airbnb’s launch of “Services” reads like a dream for consumers. Choosing a destination, a place to stay, activities and add-ons such as a chef or massage services in one place? Easy peasy.
And as the short-term rental (STR) giant seeks to expand beyond travel, it's also marketing Services to Airbnb account holders to use in their own cities and their own homes—as Services can take place in anyone's home or at local facilities.
But is the launch of hotel-style ancillaries a double-edged sword when it comes to those hosted on property at an Airbnb? Could Airbnb's new vertical end up being more of a nightmare than a dream for hosts who own the rental properties where these services may sometimes take place?
“We're witnessing … the start of digital feudalism that concentrates power and extracts value without proportional contribution,” said Humphrey Bowles, founder and CEO of Truvi (formerly Superhog), which provides STR hosts with risk management software.
Bowles—who has repeatedly referred to Airbnb's move to add Services as “digital sharecropping” since the company is not sharing this ancillary revenue with property owners—believes that the addition of Services is “fundamentally unfair” to the host community on Airbnb.
Other industry stakeholders have similar concerns.
“The people that own and maintain the real estate have been left out of the equation,” said Annie Sloan, co-founder and CEO of The Host Co., a digital commerce marketplace that aims to bring hotel-like amenities to STRs and that was a PhocusWire Hot 25 Travel Startup for 2024.
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“Imagine you own a coffee shop: You built it, you picked out the beans, you decorated it, you did all this stuff and it's going great,” Sloan said. “And then one day, someone pushes in a pastry cart right next to the cash register and starts selling their own pastries. Like, what?”
How ‘Services’ could be unfair to hosts
Airbnb hosts bear the brunt of services being carried out on their properties without much benefit to their business, according to experts—and some believe the arrangement could actually be to Airbnb hosts’ detriment.
“[Airbnb is] essentially subletting the property for commercial activities while the owner of the property gets nothing extra for that privilege,” Bowles said.
“If I were the host, I would not be thrilled that local businesses will practice their trade at my property,” said Max Starkov, hospitality and travel consultant. “Especially since I won’t be making a dime!”
Hosts are reacting too, Sloan said. “The thing that we heard most from hosts as soon as this happened was, ‘How do I start direct booking?’”
According to Sloan, Airbnb is leveraging physical assets it doesn’t own, and Bowles contended that it’s the hosts, not Airbnb, who take on the risks.
“The host bears all of the operational costs and risks while Airbnb captures the profit,” Bowles said. “So, you're going to have increased wear and tear on your properties—massage tables, cooking equipment, workout sessions, weights—it's all happening in the host space with no additional compensation.”
In addition, Airbnb said in a May 13 Resource Center post that Services are “automatically allowed” in hosts’ homes unless the host takes steps to opt out.
The company said, “This is one way to show guests you’re invested in making their stay even more special.” But Bowles expressed concern over the fact that hosts may not even be aware that said “Services” are taking place in their home, generating insurance concerns.
“The host has to be able to put the right insurance in place for their business. That is not Airbnb’s responsibility,” Bowles said. “Hosts must now coordinate access, manage any scheduling conflicts, handle complaints if the services go wrong—probably—and deal with all the additional foot traffic, all while Airbnb will probably collect 15%-20% commission on the services that can cost hundreds of dollars.”
Airbnb said on its website that Services hosts are required to keep liability insurance as applicable to their business, and they are covered by Airbnb’s Experiences & Services liability insurance, which is included with AirCover for hosts. The company also said those providing Services must complete Airbnb’s identity verification process, must have valid licenses and certifications for their particular activity and must have at least two years of experience.
The addition of Services comes weeks after Airbnb updated its Off-Platform Fee and Transparency Policy, seemingly creating a closed ecosystem ahead of the new vertical launch. Among other rule changes, the new policy prohibits off-platform fees for reservations. The policy changes reportedly took effect May 10—three days before Services launched.
We're witnessing … the start of digital feudalism that concentrates power and extracts value without proportional contribution.
Humphrey Bowles, Truvi
“The thing that we've heard most is a climate of fear,” Sloan said about the off-platform fee policy update. “Mostly around like, ‘Am I going to get de-platformed if I suggest my own massage therapist?’ People are so afraid of losing their entire business.”
When asked for response to concerns around the Services launch and potential detriment to hosts, Airbnb outlined benefits, mainly that travelers may be looking for accommodations that offer add-ons and that hosts can earn a cash reward for referring a new service provider to the platform.
Airbnb also highlighted that hosts can opt out of specific services, and if guests try to book a service that isn’t allowed on property, they will be reminded of house rules with a “warning” and will have to select a different location to book the service. The company also touted benefits to those providing the services, saying this new opportunity will allow them to reach “millions of people on Airbnb.”
Can ‘Services’ be improved?
Both Sloan and Bowles expressed admiration for Airbnb and co-founder and CEO Brian Chesky’s willingness to try new things, but they believe the launch of Services could have been better handled.
“There is a disconnect with host involvement and using the wisdom of hosts to to structure the offers,” Sloan said.
The host knows their guest or guest type better than anyone else—Airbnb included—and that should be taken into consideration, she said. Additionally, Sloan said curation, control and revenue are important factors to consider with this kind of launch, with respect to host involvement.
“This is breaking the trust, because you [a host] have, up to this point, curated every single part of your host experience, and all of a sudden, you have no visibility,” Sloan said of Services.
For Bowles, there are three ways Services could contribute to the creation of “real entrepreneurs” who own their distribution lists:
- An evolution toward shared platform ownership with hosts
- Transparency when it comes to how Airbnb’s algorithms work, so people can understand the end-to-end process
- Sharing of guest data
Bowles also had a few recommendations as to how a fairer Services model might work.
The first is revenue sharing with hosts. According to Bowles, hosts should get a significant cut from the service being performed, as they are providing a venue, absorbing risks and possibly handling other tasks such as coordination.
He also maintained that there should be a “true opt-in” as opposed to the existing opt-out situation. “No auto enrollment, no pressure tactics,” he said.
And he agreed with Sloan that hosts should be involved with curation.
There is a disconnect with host involvement and using the wisdom of hosts to to structure the offers.
Annie Sloan, The Host Co.
“I also think we need to let hosts curate and recommend their own local service providers, rather than forcing Airbnb’s network onto their guests,” he said, noting that authenticity was “what made Airbnb great.”
“We need to preserve that authentic local connection that made this industry so special.”
Following his interview with PhocusWire, Bowles brought the question of how to create a fairer Services policy to LinkedIn and elaborated on his thoughts, adding that he believes there is a need for transparent economics, and Services should allow host-guest relationships to strengthen.
“The tragedy isn't that Airbnb was always exploitative ... the tragedy is that they built something genuinely valuable but now choose to prioritize extraction over preserving what made them special,” Bowles said on LinkedIn.
Phocuswright Europe
Make plans to attend Phocuswright Europe in Barcelona from June 10-12 to hear from Emmanuel Marill, Airbnb's regional director for Europe, the Middle East and Africa.